Higgs signals opposition to AG efforts to oversee pension body, hours after MLAs show support

New Brunswick MLAs from all parties voted Wednesday to call officials from the pension management agency Vestcor in front of the Legislature's public accounts committee, in a striking show of support for Auditor General Kim Adair-MacPherson in her ongoing dispute with the former Crown entity.

But late in the day, Premier Blaine Higgs issued his own statement declaring his government would not alter legislation to force Vestcor to submit to Adair-MacPherson's oversight as she has requested.

"There is no plan to change legislation," Higgs said in the statement, which largely took Vestcor's side in its stand off with the auditor general. 

"Vestcor was set up to operate independently, reporting to shareholders, who are the pension holders."

The premier's tone on the issue was a stark change from the morning, when government and opposition MLAs spoke unanimously of their support of a motion aimed at advancing Adair-MacPherson's effort to review Vestcor's operations.

"Members of the government side support the motion fully keeping in the spirit and the theme of government members supporting the auditor general fully at all times," said Progressive Conservative MLA Jeff Carr prior to casting his own vote to summon Vestcor to answer questions.

Although the motion to summon Vestcor was originally made Tuesday by People's Alliance Leader Kris Austin, Green Party MLA Megan Mitton also spoke in favour of it, as did Liberal MLA Robert McKee.

"I think its important that we be able to ask questions of Vestcor," said McKee.

People's Alliance MLA Michelle Conroy paused to make note of the unanimous support.

"Thank you everybody.  We love to see a collaborative working government."

Committee Chair and Liberal MLA Lisa Harris echoed Conroy's statement and congratulated all members for the non partisan support of the auditor general.   

"This is an example of how public accounts is supposed to work," said Harris after the vote to summon Vestcor was approved. "Bravo team."

Vestcor is the Fredericton-based organization set up to manage what is now $18 billion in New Brunswick government pension and other funds.   

Formally known as the New Brunswick Investment Management Corporation, it was created by the province and owned by it directly for more than two decades, with reviews by the auditor general's office of its operations commonplace.  

However, in 2016, it was given its independence and rebranded as Vestcor. When Adair-MacPherson requested access to a number of its financial documents beginning in late 2019, the agency refused.  

In a statement released this week, Vestcor accused the auditor general of attempting to overstep her authority now that it is on its own.

"Our analysis and advice have indicated that the auditor general should be much more limited with respect to access to Vestcor related information than what had been requested, and we therefore have had to respectfully decline these requests," read the statement.

Auditor general doesn't agree

The defiance has been received cooly by Adair-MacPherson, who is adamant Vestcor is still subject to provincial oversight, and this week she turned to MLAs for help enforcing her point.

In a written response to the vote by MLAs, Adair-MacPherson said she was pleased the public accounts committee so quickly agreed to call Vestcor to appear before it.

"The hope of this recommendation, along with others in our report, is to prevent future disagreements over access so that my office can fulfil our legislated mandate as per Auditor General Act and conduct necessary audit work of over $18 billion in New Brunswick public sector related funds," she said.

But within hours, her key request to the province that it change legislation to explicitly list Vestcor as falling under her jurisdiction to audit was rejected by Premier Higgs.  

In his statement he said he was not opposed to MLAs summoning Vestcor  to answer questions and suggested it might enlighten some about the body's independence. 

"I understand it was voted on to have Vestcor appear at Public Accounts, and I hope that will result in the committee fully understanding the structure and reporting practices of Vestcor," said Higgs in the statement.  

Billions of dollars in funds Vestcor invests impact the New Brunswick government's financial statements and  the province pays Vestcor millions of dollars in annual pension contributions on behalf of employees.

Last year, when hundreds of millions of dollars in nuclear decommissioning and spent fuel management funds managed for NB Power by Vestcor lost value in the COVID-19 market crash in March, it transformed the utility's profit into a loss and drove up the province's deficit.

Adair-MacPherson insists those financial ties mean Vestcor is still within her authority to audit. 

"Vestcor is an auditable entity because, in substance, it is both a service provider on behalf of the Province and a funding recipient from the Province," she wrote in her report.   

"The auditor general is entitled to free access to information that relates to fulfilling her responsibilities, such as the audit of the Province's financial statements, which requires information from Vestcor."    

Other questions

Adair-MacPherson also made the point Vestcor obtained its independence in part on suggestions it would be freed up to market its expertise and manage funds for public bodies outside New Brunswick.

"We have had preliminary discussions with some fairly big public sector pools of money, even outside the province," she quotes Vestcor CEO John Sinclair telling MLAs back in 2016.

But no out of province pools of money have yet signed on and Adair-MacPherson told MLAs  they should be asking questions about that.

"In our view, potential growth outside New Brunswick was one of the main arguments Vestcor and its representatives used to convince legislators that Vestcor needed to be a private entity," said Adair-MacPherson in her report.

"Since Vestcor has not grown its public sector client base outside of New Brunswick, an audit by the auditor general could verify and publicly report on what steps Vestcor is taking to grow its public sector client base."  

The motion voted on by MLAs requires Vestcor to appear before the public accounts committee in the coming days, but also puts it on a permanent list of "entities who are regularly called to appear before the committee."